Incident: BOE announced its 2024 semi-annual results forecast. The company expects 2024H1 to achieve net profit of 21.0 to 2.3 billion yuan, an increase of 185% to 213% over the previous year; net profit of 14.5 to 1.65 billion yuan after deducting non-return to mother. Among them, the 2024Q2 net profit for the single quarter was 11.16 to 1.316 billion yuan, up 128.5% to 169.4% year on year and 13.5% to 33.8% month on month.

2024H1 benefited from the early release of channel stocking requirements. According to the company's announcement, LCD benefited from large-scale sporting events and e-commerce promotions in 2024H1, and end customer stocking requirements (especially TV panel requirements) were centrally released ahead of schedule. This is reflected in the obvious upward trend of price-side TV products in March and April, then the increase gradually narrowed; at the same time, the prices of some IT products gradually began to rise. In terms of production strategy, the company insists on “on-demand production”, flexibly adjusts production line operations according to changes in demand, and continuously optimizes the product structure. We believe that during the period when panel prices are rising, the company still adheres to the “on-demand production” strategy, which shows the company's determination to adjust the long-term flexible operating rate. It is also conducive to weakening future panel price fluctuations, and the company is expected to achieve stable profits in the future.

Flexible AMOLED shipments continued to grow year over year. According to the company's announcement, as the penetration rate of AMOLED products continues to rise, shipments of 2024H1 corporate AMOLED products continued to grow year-on-year, while the company continued to use its advantages and continue to gain strength in the high-end AMOLE market represented by folding. We believe that along with the optimization of the product structure brought about by the company's continued strength in the high-end field and continuous efforts towards the target of 0.16 billion film shipments throughout 2024, the company's profitability in the AMOLED field is expected to continue to improve. In the future, with the release of production capacity of the world's first batch of 8.6-generation OLED production lines, the company is expected to continue to be a leader in card chip semiconductor displays. At the same time, with the gradual penetration of OLED in medium sizes, the company's revenue scale is also expected to increase further.

Panel prices in early July: remained flat at a high level during the year. According to WitsView data, the price of TV panels, display panels, and notebook panels of all sizes in early July was the same as the previous period. Among them, the average price of 65-inch TV panels in early July was 178 US dollars, which is the highest level in the year. At the same time, compared to the historical low of nearly 5 years (September 2022), it has increased 72 US dollars, and there is still a gap of 110 US dollars compared to the historical high of nearly 5 years (July 2021).

Profit forecast and investment recommendations: We expect the company's 2024E/2025E/2026E to achieve operating income of 208.1/231.5/255.8 billion and net profit to mother of 6.01/9.13/11.09 billion, corresponding to the current PB valuation of 1.2/1.1/1.1x, and maintain a “highly recommended” rating.

Risk warning: Downstream demand falls short of expectations, industry competition intensifies, and new production capacity construction falls short of expectations.